1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _____________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of earliest event reported: October 21, 1998 AMR CORPORATION (Exact name of registrant as specified in its charter) Delaware 1-8400 75-1825172 (State of Incorporation) ( Commission File Number) (IRS Employer Identification No.) 4333 Amon Carter Blvd. Fort Worth, Texas 76155 (Address of principal executive offices) (Zip Code) (817) 963-1234 (Registrant's telephone number) 2 Item 5. Other Events AMR Corporation (the "Company") is filing herewith a press release issued October 21, 1998 by the Company as Exhibit 99.1 which is included herein. This press release was issued to report third quarter 1998 earnings and to announce that the Company's board of directors has authorized management to repurchase additional shares of its outstanding common stock. Item 7. Financial Statements and Exhibits The following exhibit is included herein: 99.1 Press Release 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMR CORPORATION /s/ Charles D. MarLett Charles D. MarLett Corporate Secretary Dated: October 21, 1998 4 EXHIBIT INDEX Exhibit Description 99.1 Press Release 5 Exhibit 99.1 Contact: Tim Kincaid Fort Worth, Texas 817-967-1577 FOR RELEASE: Wednesday, Oct. 21, 1998 AMR REPORTS RECORD THIRD QUARTER EARNINGS OF $433 MILLION; COMPANY TO INITIATE ANOTHER $500 MILLION STOCK REPURCHASE FORT WORTH, Texas -- AMR Corp., parent company of American Airlines Inc., today reported record third quarter net earnings of $433 million, or $2.49 per common share diluted, a 34 percent improvement over net earnings of $323 million, or $1.78 per common share diluted, during the same period in 1997. These are the highest quarterly earnings in the company's history, and the sixth consecutive quarter of record earnings for AMR. "Solid demand, stable yields and lower fuel prices all contributed to our outstanding third quarter performance," said Donald J. Carty, AMR's chairman and CEO. 'The third quarter was especially challenging for our employees. In addition to serving the usual heavy summer flow of customers, our people also admirably contended with the effects of Hurricane Georges in the Caribbean and Florida, plus they accommodated thousands of additional passengers stranded by the strikes at Northwest and Air Canada. The employees of American and American Eagle can be very proud of our performance in this quarter." Additionally, AMR completed in September a $500 million stock repurchase program that began in July. This follows the completion last quarter of a $500 million stock repurchase program that began in 1997. Today, AMR announced that the company's board of directors has authorized management to repurchase up to an additional $500 million of its outstanding common stock. This represents approximately 8.6 million shares of common stock at yesterday's closing price of $57.94. "We have strengthened our balance sheet during the past few years by using our substantial free cash flow," Carty said. "Free cash flow generated that is in excess of our needs is being returned to our shareholders." -- more -- 6 AMR Reports Third Quarter Earnings of $433 million October 21, 1998 Page 2 Repurchases, including block repurchases, are expected to be made in the open market or in private transactions, from time to time, depending on market conditions, and may be discontinued at any time. Among AMR's third quarter highlights: o American joined with British Airways, Canadian Airlines International, Cathay Pacific and Qantas to introduce the new oneworld global airline alliance. o AMR announced it would sell the three AMR Global Services companies -- AMR Services, AMR Combs and TeleService Resources -- to focus on its core airline and related technology businesses. o AMR announced and completed a $500 million stock repurchase program, after completing another $500 million buy-back in the second quarter. o AMR received Department of Justice clearance for investment in Aerolineas Argentinas. o American introduced new nonstop service between Houston Hobby Airport and New York LaGuardia, plus began flights between Dallas Love Field and Austin. o American and US Airways introduced new reciprocal frequent flyer and airport membership club programs. o American began new service between DFW and Manchester, U.K. o American's network of codeshare partners grew with a new agreement with Finnair; expansion of existing codeshares with Grupo TACA and Iberia; and the beginning of codesharing with Asiana and China Eastern. o American announced orders for an additional 15 Boeing 777s, for 2000-2001 delivery. o American Eagle ordered 75 new 37-seat Embraer ERJ-135s, with options for 75. o American Eagle regional jet service expanded to serve 12 cities. o American began contract negotiations with the Association of Professional Flight Attendants. ### 7 AMR CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In millions, except per share amounts)
Three Months Ended September 30, Percent 1998 1997 Change Revenues Airline Group Passenger-American Airlines $3,871 $3,713 4.3 -AMR Eagle 304 262 16.0 Cargo 158 169 (6.5) Other 250 233 7.3 4,583 4,377 4.7 The SABRE Group 604 457 32.2 Management Services Group 31 26 19.2 Less: Intergroup revenues (172) (154) 11.7 Total operating revenues 5,046 4,706 7.2 Expenses Wages, salaries and benefits 1,632 1,521 7.3 Aircraft fuel 400 466 (14.2) Depreciation and amortization 328 306 7.2 Commissions to agents 311 332 (6.3) Maintenance, materials and repairs 251 224 12.1 Other rentals and landing fees 231 223 3.6 Food service 184 176 4.5 Aircraft rentals 142 143 (0.7) Other operating expenses 835 708 17.9 Total operating expenses 4,314 4,099 5.2 Operating Income 732 607 20.6 Other Income (Expense) Interest income 37 40 (7.5) Interest expense (93) (101) (7.9) Interest capitalized 28 5 * Minority interest (12) (10) 20.0 Miscellaneous - net 16 - - (24) (66) (63.6) Income From Continuing Operations Before Income Taxes 708 541 30.9 Income tax provision 277 219 26.5 Income From Continuing Operations 431 322 33.9 Income From Discontinued Operations(less applicable income taxes) 2 1 * Net Earnings $ 433 $ 323 34.1 Continued on next page * Greater Than 100% 8 AMR CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED) (Unaudited) (In millions, except per share amounts)
Three Months Ended September 30, 1998 1997 Earnings Per Common Share Basic Before Discontinued Operations $ 2.56 $ 1.83 Discontinued Operations 0.01 - Net Earnings $ 2.57 $ 1.83 Diluted Before Discontinued Operations $ 2.48 $ 1.78 Discontinued Operations 0.01 - Net Earnings $ 2.49 $ 1.78 Number of Shares Used in Computation Basic 169 176 Diluted 174 181 9 AMR CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In millions, except per share amounts)
Nine Months Ended September 30, Percent 1998 1997 Change Revenues Airline Group Passenger - American Airlines $11,238 $10,744 4.6 - AMR Eagle 849 766 10.8 Cargo 490 507 (3.4) Other 720 658 9.4 13,297 12,675 4.9 The SABRE Group 1,735 1,346 28.9 Management Services Group 86 73 17.8 Less: Intergroup revenues (514) (451) 14.0 Total operating revenues 14,604 13,643 7.0 Expenses Wages, salaries and benefits 4,817 4,480 7.5 Aircraft fuel 1,219 1,457 (16.3) Depreciation and amortization 966 919 5.1 Commissions to agents 934 975 (4.2) Maintenance, materials and repairs 704 633 11.2 Other rentals and landing fees 667 658 1.4 Food service 523 510 2.5 Aircraft rentals 427 430 (0.7) Other operating expenses 2,343 2,054 14.1 Total operating expenses 12,600 12,116 4.0 Operating Income 2,004 1,527 31.2 Other Income (Expense) Interest income 103 100 3.0 Interest expense (280) (310) (9.7) Interest capitalized 71 10 * Minority interest (37) (32) 15.6 Miscellaneous - net (3) (11) (72.7) (146) (243) (39.9) Income From Continuing Operations Before Income Taxes 1,858 1,284 44.7 Income tax provision 734 519 41.4 Income From Continuing Operations 1,124 765 46.9 Income From Discontinued Operations (less applicable income taxes) 8 12 (33.3) Net Earnings $1,132 $ 777 45.7 Continued on next page * Greater Than 100% 10 AMR CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED) (Unaudited) (In millions, except per share amounts)
Nine Months Ended September 30, 1998 1997 Earnings Per Common Share Basic Before Discontinued Operations $ 6.57 $ 4.25 Discontinued Operations 0.05 0.06 Net Earnings $ 6.62 $ 4.31 Diluted Before Discontinued Operations $ 6.34 $ 4.16 Discontinued Operations 0.05 0.06 Net Earnings $ 6.39 $ 4.22 Number of Shares Used in Computation Basic 171 180 Diluted 177 184 11 AMR CORPORATION NOTES TO CONSOLIDATED STATEMENT OF OPERATIONS 1.All share and earnings per share amounts have been restated to give effect to the stock split on June 9, 1998. The 1997 earnings per share amounts also have been restated as required to comply with Statement of Financial Accounting Standards No. 128, "Earnings Per Share." 2.On September 29, 1998, the Company announced its plan to sell most of the companies that comprise the largest unit of the Management Services Group - AMR Global Services. The companies to be disposed of include AMR Services, AMR Combs and TeleService Resources. Accordingly, the results of operations for these companies have been reflected in the consolidated statement of operations as income from discontinued operations for all periods presented. 3.The minority interest in the earnings of consolidated subsidiaries has not been allocated to a reporting segment. 4.Certain amounts from 1997 have been reclassified to conform with 1998 presentation. 12 AMR CORPORATION BUSINESS SEGMENT FINANCIAL HIGHLIGHTS (Unaudited) (In millions) * Greater Than 100%
Three Months Ended September 30, Percent 1998 1997 Change Airline Group Revenues Passenger - American Airlines $3,871 $3,713 4.3 - AMR Eagle 304 262 16.0 Cargo 158 169 (6.5) Other 250 233 7.3 4,583 4,377 4.7 Expenses Wages, salaries and benefits 1,446 1,380 4.8 Aircraft fuel 400 466 (14.2) Commissions to agents 311 332 (6.3) Depreciation and amortization 265 259 2.3 Maintenance, materials and repairs 250 224 11.6 Other operating expenses 1,286 1,207 6.5 Total operating expenses 3,958 3,868 2.3 Operating Income 625 509 22.8 Other Expense (29) (66) (56.1) Earnings Before Income Taxes $ 596 $ 443 34.5 Pre-tax Margin 13.0% 10.1% 2.9 pts. The SABRE Group Revenues $ 604 $ 457 32.2 Operating Expenses 506 368 37.5 Operating Income 98 89 10.1 Other Income 15 3 * Earnings Before Income Taxes $ 113 $ 92 22.8 Pre-tax Margin 18.7% 20.1% (1.4) pts. Management Services Group Revenues $ 152 $ 151 0.7 Less:Revenues From Discontinued Operations (121) (125) (3.2) Revenues From Continuing Operations 31 26 19.2 Operating Expenses 140 138 1.4 Less: Expenses From Discontinued Operations (118) (121) (2.5) Operating Expenses From Continuing Operations 22 17 29.4 Operating Income From Continuing Operations 9 9 - Other Income From Continuing Operations 2 7 (71.4) Earnings From Continuing Operations Before Income Taxes $ 11 $ 16 (31.3) Pre-tax Margin From Continuing Operations 35.5% 61.5% (26.0) pts. 13 AMR CORPORATION BUSINESS SEGMENT FINANCIAL HIGHLIGHTS (Unaudited) (In millions) * Greater Than 100%
Nine Months Ended September 30, Percent 1998 1997 Change Airline Group Revenues Passenger - American Airlines $11,238 $10,744 4.6 - AMR Eagle 849 766 10.8 Cargo 490 507 (3.4) Other 720 658 9.4 13,297 12,675 4.9 Expenses Wages, salaries and benefits 4,277 4,059 5.4 Aircraft fuel 1,219 1,457 (16.3) Commissions to agents 934 975 (4.2) Depreciation and amortization 781 781 - Maintenance, materials and repairs 702 632 11.1 Other operating expenses 3,728 3,558 4.8 Total operating expenses 11,641 11,462 1.6 Operating Income 1,656 1,213 36.5 Other Expense (131) (223) (41.3) Earnings Before Income Taxes $1,525 $ 990 54.0 Pre-tax Margin 11.5% 7.8% 3.7 pts. The SABRE Group Revenues $1,735 $1,346 28.9 Operating Expenses 1,413 1,054 34.1 Operating Income 332 292 10.3 Other Income 18 5 * Earnings Before Income Taxes $ 340 $ 297 14.5 Pre-tax Margin 19.6% 22.1% (2.5) pts. Management Services Group Revenues $ 460 $ 463 (0.6) Less: Revenues From Discontinued Operations (374) (390) (4.1) Revenues From Continuing Operations 86 73 17.8 Operating Expenses $ 419 $ 418 0.2 Less: Expenses From Discontinued Operations (359) (367) (2.2) Operating Expenses From Continuing Operations 60 51 17.6 Operating Income From Continuing Operations 26 22 18.2 Other Income From Continuing Operations 4 7 (42.9) Earnings From Continuing Operations Before Income Taxes $ 30 $ 29 3.4 Pre-tax Margin From Continuing Operations 34.9% 39.7% (4.8) pts. 14 Airline Group Operating Statistics (Unaudited)
Three Months Ended September 30, Percen t 1998 1997 Change American Airlines Jet Operations: Revenue passenger miles (millions) 29,132 28,500 2.2 Available seat miles (millions) 39,806 39,378 1.1 Cargo ton miles (millions) 480 506 (5.1) Passenger load factor 73.2% 72.4% 0.8 pts. Breakeven load factor 60.2% 61.2% (1.0) pts. Passenger revenue yield per passengre mile (cents) 13.29 13.03 2.0 Passenger revenue per available seat mile (cents) 9.73 9.43 3.2 Cargo revenue yield per ton mile (cents) 32.61 33.05 (1.3) Operating expenses per available seat mile (cents) 9.22 9.14 0.9 Fuel consumption (gallons, in millions) 728 712 2.2 Fuel price per gallon (cents) 53.1 63.5 (16.4) Fuel price per gallon, excluding fuel taxes (cents) 48.4 58.5 (17.3) Operating aircraft at period-end 645 642 0.5 AMR Eagle: Revenue passenger miles (millions) 753 670 12.4 Available seat miles(millions) 1,156 1,070 8.0 Passenger load factor 65.1% 62.6% 2.5 pts. Operating aircraft at period-end 207 196 5.6 AMR Corporation Average Equivalent Number of Employees Airline Group: AA Jet Operations 82,300 81,800 Other 10,800 10,100 Total Airline Group 93,100 91,900 The SABRE Group 11,700 8,600 Management Services Group 13,100 15,600 Total 117,900 116,100 15 Airline Group Operating Statistics (Unaudited)
Nine Months Ended September 30, Percent 1998 1997 Change American Airlines Jet Operations: Revenue passenger miles (millions) 82,443 81,113 1.6 Available seat miles (millions) 116,476 115,636 0.7 Cargo ton miles (millions) 1,485 1,507 (1.5) Passenger load factor 70.8% 70.1% 0.7 pts. Breakeven load factor 59.2% 61.3% (2.1) pts. Passenger revenue yield per passenger mile (cents) 13.63 13.25 2.9 Passenger revenue per available seat mile (cents) 9.65 9.29 3.9 Cargo revenue yield per ton mile (cents) 32.64 33.22 (1.7) Operating expenses per available seat mile (cents) 9.27 9.23 0.4 Fuel consumption (gallons, in millions) 2,120 2,082 1.8 Fuel price per gallon (cents) 55.6 67.7 (17.9) Fuel price per gallon, excluding fuel taxes (cents) 50.8 62.8 (19.1) Operating aircraft at period-end 645 642 0.5 AMR Eagle: Revenue passenger miles (millions) 2,076 1,924 7.9 Available seat miles (millions) 3,326 3,160 5.3 Passenger load factor 62.4% 60.9% 1.5 pts. Operating aircraft at period-end 207 196 5.6